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Minn. surplus good sign of recovery but doesn't reflect debt

WILLMAR -- The latest budget forecast released Wednesday showing the state brought in $323 million more than expected is good news. Sort of.

"I think it's good news," said Rep. Bruce Vogel, who viewed the forecast as a sign of a quick turnaround from a $5 billion deficit.

"It's a good day for Minnesota, to see us coming back," said Vogel, R-Willmar, especially since it comes on top of an $876 million surplus in November.

But Rep. Lyle Koenen, DFL-Clara City, said the last two budget forecasts did not include the $2.7 billion budget shift from K-12 schools. State aid payments owed to school districts were delayed in order to balance the last budget.

Past budget forecasts had included that ongoing financial responsibility to schools, Koenen said.

"Full disclosure -- everybody should understand that," he said. "But it still shows improvement in the next budget cycle. So that's good news."

Vogel said improvements in the last two budget forecasts, and lower unemployment figures, show the state's economy is "coming back a little bit."

Vogel gives credit to legislative action taken last year to "slow down the growth" of state spending.

The message that legislators were "willing to hold the line," along with action to reduce permitting red tape, gave businesses the confidence to start hiring more people, said Vogel.

Both Koenen and Vogel agree that repaying the school debt, and adding to the state's budget reserve fund, are top priorities.

Current state law requires that any surplus funds go to the reserve fund and to schools and that legislators may not be allowed to deviate unless there's legislative action in the next couple weeks to do so.

"I don't think we'll see money going other places at this point," said Vogel.

"That's the priority, but if I know this place, there will be bills to spend the money elsewhere," said Koenen with a laugh.

Besides schools and plumping up the reserve fund, Koenen said the only other place he would consider dedicating funds is for addressing the elimination of the market value homestead tax credit, which increased property taxes for many homeowners, farmers and business owners.

Carolyn Lange

A reporter for more than 30 years, Carolyn Lange covers regional news with the West Central Tribune.

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